The government plans to provide cargo owners with three-year subsidies for transporting commodities via inland waterways, aiming to boost freight movement in India, which currently stands at just 2%. The proposed change includes a 35% subsidy for river transportation on national waterways 1, 2, and 16, with an expected shift of about 800 million tonne-kilometers (tkm) of cargo to interior waterways. This move highlights the need to encourage cargo mode shifts and develop physical infrastructure to support the inland water transport industry, which is comparatively underdeveloped.
The scheme is estimated to cost approximately Rs 100 crore, with funds allocated for inland vessel services construction and subsidies. Despite road transport holding a 65% modal share and rail following at 26%, inland water transport (IWT) only accounts for 2% of India’s total freight movement. To bridge this gap, financial incentives up to 35% of actual operating costs on waterways journeys will be offered to encourage cargo transfer from road or rail to IWT, especially for long-distance canal transportation over 300 km.
The incentives provided will not cover the first or last mile of travel, focusing instead on promoting sustainable modal transfer. Scheduled transit services by Inland & Coastal Shipping (ICSL) will demonstrate the reliability of waterways, funded by the Inland Waterways Authority of India (IWAI). Initially, the plan will target three waterways, with potential expansion based on its effectiveness. This initiative aims to enhance India’s freight movement while addressing the disparity in investment between road and rail sectors compared to the IWT sector.
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